Productivity trends in the construction industry

The main objective of this thesis is to analyze trends in the productivity performance of the construction industry and the causal factors influencing its changes along time. After an introduction of the problem, and a discussion of the concept of productivity, carried out in Chapter 2, existing studies on the evolution of construction productivity are reviewed. It is shown that the debate itself changed along with alterations in the performance of construction productivity. A presentation of available data on construction productivity and its components follows. General trends in construction inputs, output, and productivity are described, and several indicators are compared, whenever possible, to check for possible inconsistencies. The cyclical behavior of the variables is also described. A short and a long series of construction productivity are estimated. In contrast to the view of construction as an industry of slow growing productivity, available data show a pattern of cyclical oscillations in construction. In the postwar period, productivity increases from 1947 to 1968 and decreases thereafter. The long run series shows similar oscillations in productivity before the war. Next, existing studies of the causes of productivity change in the economy as a whole and in construction are reviewed in Chapter 4. Of the possible causes discussed, some are selected for a more detailed analyses and estimates, in Chapter 5. The conclusion is that, although the sharp decline in construction productivity after 1968 is not totally explained, some causes have a strong connection with this decline, and seem responsible for the vulnerability of construction to periods of slowdown in the economy. Negative effects of cyclicality affect potential gains of scale, particularly in housing. On the other hand, more stable sub-sectors have presented a stagnation or declining output, with corresponding losses of scale. Although the relationship between output and productivity works in both directions, a large part of the decline in output is probably induced by demand factors. The nature of technological change in construction also increases its vulnerability. Finally, changes in relative prices, especially the large increase in prices of construction materials, are big enough to have induced reductions in productivity.